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I have noted before the curious way that AIM listed penny share dreadful Sefton Resources (LSE:SER) communicates with its investors. Having advised you to bail at 2p initially I reiterated my sell advice a couple of days ago with the shares at 1.58p after the company issued piss poor interims. But my confusion with the way this company keeps investors updated grows by the day.
I start with its California producing assets and with what production Sefton has historically delivered.
On 6th March 2012 Sefton announced “Currently Sefton is averaging approximately 140 bopd for the month of February (with production as high as 178 BOPD in the later part of the month).”
Well er… not exactly. I kind friend has pointed me to the website for the California Department of Oil, Gas and Geothermal Resources (DOGGR). I have never been into dogging before but this website really is a terrifically exciting read. I refer you to the page which happens to publish output numbers from Sefton’s field on a month by month basis. It normally publishes within 3 weeks of the month end. The new page to bookmark for we friends of Sefton is HERE
And so according to DOGGR, in February 2012 (a leap year) Sefton produced 3,847 barrels – 132.6 bopd on average. Okay only a small shortfall but it would have been good to let investors know. And based on the great numbers boasted about for the end of the month what would investors have expected March output to average? Your guess? A bit of extrapolation? Go on. Be a sport and have a go. Ok, as it happens total output was 3,403 barrels which is just under 110 bopd per day.
On March 27th Calendar 2011 results were announced but investors were not kept updated on the March slowdown. In April my pals at DOGGR say that output was 3,420 barrels (114 bopd) but still investors were not told and surely must have been hoping for output of 140 bopd or 178 bopd or whatever.
On May 2nd Sefton proudly announced “Remedial work by workover rig has already allowed oil production to increase to 142 BOPD with as much as 220 BOPD recorded in recent days”
And thus on 14th May it was able to raise £2 million at 1.75p. So what do you reckon that May output was? Want to guess? 142 bopd? 220 bopd? Er ….no. Try a total of 4,179 barrels of oil or just under 135 bopd. By June that number was down to 3,042 barrels or 101 bopd.
Were investors informed? Well sort of. At the AGM on 14th June shareholders were told:
“Oil production was maintained at 140 barrels of oil per day in May and is expected to increase as more wells are worked over, recompleted or cyclic steamed now that a rig is on site.”
Well my pals at DOGGR seem to think that May number is wrong (too high) and as for rising production well that seems to have been sheer fantasy.
On 11th July Sefton announced:
“Oil production is averaging 170 barrels per day and is on a rising trend as the programme of well workovers and associated cyclical steaming continues with production peaking at over 200 barrels of oil per day.”
So what do you reckon the July scores on the doors said? 170? 200? No wrong again according to DOGGR. Actual answer 3,610 barrels or 116 bopd.
I could go on. I could not sleep last night. I tried to distract myself by having another go at a US listed Chinese company on the short tack (follow me on twitter @tomwinnifrith for an alert on when and where that goes out – it is a total hoot) but that was too easy and so, stockmarket geek that I am, I went back through several years of RNS releases from Sefton and it is a pretty similar pattern of disclosure.
It strikes me that if a bumbling amateur like me can stumble across the DOGGR website and figure out that what it says does not exactly tally with what investors are being told via RNS statements (which presumably supported the numerous placings Sefton has undertaken) then the very clever fellows at the company’s Nominated Advisor must surely have the same information. But they are signing off on these announcements and placings so that cannot be a problem can it? Well I am sure that there is a perfectly reasonable explanation for all of this and I look forward to hearing from NOMAD and joint broker Fox Davies on this matter. I know that the team there are big fans of my work and so will be getting a tweet about this piece soon.
But I am not finished with Sefton yet. The company keeps on saying that its operations will produce more but the big step up will come when they go for a full scale steamflood of the asset. This will be a costly operation and Sefton does not have anything like the cash needed to fund it so the board instructed an expert, Dr Ali, to assess the viability of such an operation. That was back in late 2010 or early 2011. Here are the statements made about his report via RNS releases. Remember that this is the great excitement which investors have been promised.
RNS 6 April 2011 — The preparatory work for the steam flood sensitivity geologic modelling will be completed in early April ready for Dr Farouk Ali to commence his steam flood modelling work, which will last several weeks and is expected to be completed in May 2011.
RNS 08 September 2011 — In California, oil production is rising on the back of steaming and we are looking forward to the publication of Dr Ali Farouq’s report in October
RNS 04 November 2011 — Dr. Farouq Ali is currently in the process of finalizing an interim report on the Tapia steamflood model
RNS 02 May 2012 — Dr Farouq Ali’s full field steam flood report on schedule to be received by the Company in June
RNS 11 July 2012 — Dr Ali report on simulation studies on the steam flood computer model of the Tapia oil field expected before the end of the summer.
RNS 11 September 2012 – Full field steam flood consultants, Petrel and Dr Ali, have confirmed they will complete the geologic model and full-field steamflood report in a timely fashion.
I suppose that depends on your definition of timely. And of course past performance is no guarantee of future returns. The shares are still 1.58p. My target price is bugger all. Sell.
Hi Tom,
Your data calculation is definitely wrong. Thank God, you never read the whole page of the link, http://opi.consrv.ca.gov/opi/opi.dll/Search?UsrP_ID=100135202&FormStack=Main%2COperator&Opr__ID=100002209&Action=Get+Sums+&PriorState=Encoded%3DTrue , and said there are 601 days for Aug2012 in website and they’re using some other calendar. I cannot stop laughing amateur.
Spreading false rumours about any company is offence, hope you know that. Are you one of the de-ramping guys in LSE blog??
Regards,
Siv
Hello Tom,
Based on my extensive knowledge and research on SER, I would say the production stated in the RNS is appropriate. But YOUR understanding is POOR! and no comment on the understanding of your “kind” friend who gave the DOGGR site.
Here is the accurate production numbers of SER
Month – bbl/day
Jan2012 – 138.88
Feb2012 – 133.85
Mar2012 – 117.71
Apr2012 – 126.53
May2012 – 148.54
Jun2012 – 140.79
Jul2012 – 125.38
Aug2012 – 127.84
DYOR please,
Dan
Continued…..
I could see your eagle eyes catching up with Jul and Aug production figures, but if you check the individual wells log (example Hartje#18 with 662bbls) has performed best (at the start of the month) as detailed in the RNS in July mid and there comes the water tank/maintenance time off!!!! So SER management has detailed clear with all information to the market. And it is not one of the Chinese companies that came in a so called “stockmarket geeks” fellows dream, lol.
Top tap, 20bbl/day potential well, Hartje18 only produced for 2 days in Aug2012
Yule7, Yule9 – less days of production for last few month
Snowusl3 – Shut-in (06-temporarily)
Hartje7, Hartje14, Hartje17 – Started producing very recently….
Continued….
“Do you agree now that SER is producing oil, making revenue and extending the business in better path” and not like some exploration companies taking toll worst than the Chinese companies you mentioned? If not have a look on the well summation (yes after understanding how to see DOGGR website information), individual well logs, pipeline schedule, Kansas plans! After having a through information, you’ll write a blog on SER that if everything goes on schedule like now SER will be at a very minimum of 3.5p plus (based on the numbers I want to say minimum 4p, but to be precise with eagle’s eyes around… hahaha).
Continued….
To add even more clarity,
DOGGR site or RNS is not a joke, and they can’t just play with numbers as they want. Even if it’s a Chinese company (as briefed by Nigel Wray in Master Investor 2012), they can’t bluff the numbers in DOGGR site or boldly publish in RNS!!!
To give a finishing touch, I agree with the delay of Dr. Ali’s report. But an appropriate investor never worries of delay in Dr.Ali’s report, rushing up with wrong number report leads to blogs by eagle eyes!! lol…
Being a blogger, I would say please “Do a proper research before commenting on anything”. If not the total respect of you in front of investors could get badly faded off! Now I think SER directors are far better than you. Ok, lets go to the topic.
Hope you won’t make same mistakes in future :p
Dan
Although, Tom has not mentioned how the opening of the gas pipeline will increase revenues, he has just given the facts. So far briefily reading through the SER news statements it appears the board are incompetent, and it appears based on trend, any increase in revenue or extra funding will be mysteriously frittered away.
Jim Ellerton seems a good salesman…. and Tom Winnifrith a good analyst. SER Seems like a straight forward short to me down to 0.75p – 1p to double your money.
Dn
DOGGR website is published by a branch of the State of Calilfornia. It has no exe to grind.
Do I believe its data or the stats pumped out by an AIM listed company on the promote? On balance I will go for the oficial data.
If Sefton thinks that DOGGR is making its numbers up & has done so consistently over many years then it can clarify the matter by publishing an RNS explaining why and what it is doing to ensure that the State of Ca is more acurate in future. In the absence of such action I draw my own conclusions.
Best wishes
Tom
Tom
Whilst I be-rated the writer on his rather foolish 1.5p target on Range Resources I tend to agree that Sefton have let investors down re time-lines and very over optimistic RNS statements.
The latest production number from DOGGR in August 2012 was stated at 3002 barrels, under 100 bopd.
Now compare this to what production was suggested would be in ‘early 2012’
‘The new wells are expected to be producing in early 2012 which should allow oil production to rise by up to 75% to an estimated 240 barrels of oil per day’
http://www.investegate.co.uk/Article.aspx?id=201111040700154852R
The current 100 bopd is some way from the implied 240 bopd. There has never been a satisfactory explanation for this significant under-performance from the company.
As Tom says, I feel the shares have further to fall, not much further though. Tom also forgets that this is primarily a trading stock, as such the shorting folks will switch tack at some point and the usual ‘Sefton spike’ will occur. Sounds painful!
Hello Tom,
Still you haven’t got my point!!! Both DOGGR and SER is correct with their data, only your understanding is POOR in calculating data!!! Here you go…
Well# Month bbl Days Avg/day
Hartje18 Jun-12 395 23 17.17391304
Hartje19 Jun-12 319 23 13.86956522
Yule5 Jun-12 310 23 13.47826087
Hartje13 Jun-12 292 23 12.69565217
Hartje15 Jun-12 205 23 8.913043478
Hartje11 Jun-12 186 23 8.086956522
Hartje16 Jun-12 164 23 7.130434783
Yule11 Jun-12 149 23 6.47826087
LackieUSLA4 Jun-12 144 23 6.260869565
Hartje12 Jun-12 142 18 7.888888889
Yule9 Jun-12 125 23 5.434782609
Yule10 Jun-12 112 23 4.869565217
Snowusl5 Jun-12 105 23 4.565217391
Holar3 Jun-12 86 30 2.866666667
Snowusl3 Jun-12 72 23 3.130434783
Hartje1 Jun-12 60 23 2.608695652
Holar7 Jun-12 39 30 1.3
Yule12 Jun-12 31 30 1.033333333
Hartje5 Jun-12 28 23 1.217391304
Sloan4X Jun-12 28 30 0.933333333
Hartje17 Jun-12 19 2 9.5
Holar7A Jun-12 17 30 0.566666667
Hartje14 Jun-12 8 16 0.5
Snowusl4 Jun-12 6 21 0.285714286
Total 3042 552 140.7876467
i.e., 3042 bbl of oil in 552 days with an average of 140.78 bopd for the month of June.
But your blog says “By June that number was down to 3,042 barrels or 101 bopd.”
There is a lot of difference between 101 stated in your blog and 140 bopd produced/stated in DOGGR/Quoted in RNS
So you’re misguiding the market with wrong numbers, I would definitely RNS is better than you with the numbers! The only reason I’m trying to brief this is “to err is human” ;)
I could remember a good quote by my friend “Learn before you let the world with news of somebody, else the world might start laughing at you”:) so please doublecheck before you blog, else the whole advfn blog and some of your good blogs could lose it’s value!
Take Care
Dan
Hello Tom,
Still you haven’t got my point!!! Both DOGGR and SER is correct with their data, only your understanding is POOR in calculating data!!! Here you go…
For June , 3042 bbl of oil in 552 days with an average of 140.78 bopd is produced.(please refer to my calculation in next message…)
But your blog says “By June that number was down to 3,042 barrels or 101 bopd.”
There is a lot of difference between 101 stated in your blog and 140 bopd produced/stated in DOGGR/Quoted in RNS
So you’re misguiding the market with wrong numbers, I would definitely say RNS is better than the blog with wrong numbers! The only reason I’m trying to brief this is “to err is human” ;)
I could remember a good quote by my friend “Learn before you let the world with news of somebody, else the world might start laughing at you”:) so please doublecheck before you blog, else the whole ADVFN blogs and some of your good blogs could lose it’s value!
Take Care
Dan
Well# Month bbl Days Avg/day
Hartje18 Jun-12 395 23 17.17391304
Hartje19 Jun-12 319 23 13.86956522
Yule5 Jun-12 310 23 13.47826087
Hartje13 Jun-12 292 23 12.69565217
Hartje15 Jun-12 205 23 8.913043478
Hartje11 Jun-12 186 23 8.086956522
Hartje16 Jun-12 164 23 7.130434783
Yule11 Jun-12 149 23 6.47826087
LackieUSLA4 Jun-12 144 23 6.260869565
Hartje12 Jun-12 142 18 7.888888889
Yule9 Jun-12 125 23 5.434782609
Yule10 Jun-12 112 23 4.869565217
Snowusl5 Jun-12 105 23 4.565217391
Holar3 Jun-12 86 30 2.866666667
Snowusl3 Jun-12 72 23 3.130434783
Hartje1 Jun-12 60 23 2.608695652
Holar7 Jun-12 39 30 1.3
Yule12 Jun-12 31 30 1.033333333
Hartje5 Jun-12 28 23 1.217391304
Sloan4X Jun-12 28 30 0.933333333
Hartje17 Jun-12 19 2 9.5
Holar7A Jun-12 17 30 0.566666667
Hartje14 Jun-12 8 16 0.5
Snowusl4 Jun-12 6 21 0.285714286
Total 3042 552 140.7876467
Nathan,
All I could say, niether Tom nor you make wrong calculations. I agree they couldn’t achieve 240bopd, they clearly stated in last RNS there are problems with tank and heat dissipation.
But telling “The latest production number from DOGGR in August 2012 was stated at 3002 barrels, under 100 bopd.” is a real joke!!! you guys are doing calculation wrong!!!
You have just looked in to the “Oil(bbl)” and you have not noticed the “Days”. think what that “Days” refer to.
Date Oil(bbl) Water(bbl) Gas (Mcf) Days
08/2012 3,002 67,043 645 601